Uncategorized

MAKE DEDUCTIONS AND PAY SUBCONTRACTORS

As one of the leading firm we FinSol Tax Advisors provide experienced and qualified Accountants who offer wide range of CIS monthly return and other taxation services.

The Construction Industry Scheme (CIS) is a scheme that is issued by the Majesty’s Revenue & Customs (HMRC) in the United Kingdom. CIS specifies the rules that contractors and deemed contractors in the construction industry must follow when they make payments to subcontractors for construction work.

Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC).

When you pay a subcontractor, you usually make some deductions from their payments.

HM Revenue and Customs (HMRC) will tell you how much to deduct from a subcontractor’s payments when you verify them.

The Construction Industry Scheme (CIS) deduction rates are:

• 20% for registered subcontractors
• 30% for unregistered subcontractors
• 0% if the subcontractor has ‘gross payment’ status – eg they don’t have deductions made

You must pay these deductions to HMRC – they count as advance payments towards the subcontractor’s tax and National Insurance bill.

How to make a CIS deduction
To make a deduction from a subcontractor’s payment, start with the total (gross) amount of the subcontractor’s invoice.

Take away the amount the subcontractor has paid for:

• VAT
• Materials
• Equipment which is now unusable (‘consumable stores’)
• Fuel used, except for travelling
• Equipment hired for this job (‘plant hire’)
• Manufacturing or prefabricating materials

Finally, deduct the CIS percentage rate (as given to you by HMRC) from the amount left. You’ll be left with the net amount you need to pay the subcontractor.

Our accountants have a fully knowledge and they are experts in their field. We provide you the friendly and correct advice so if you want any kind of service contact us today!

finsol5

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s